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Negative Interest Rates and Equities Bubbles

Negative Interest Rates and Equities Bubbles
Category: Market Reports
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Posted: 09-26-2016 01:54:00 PM

When this equity bubble bursts, will gold get a boost or will the price of gold suffer the same fate as equities as higher interest rates boost the dollar and crush the price of gold. Or will gold be the only safe haven investment?

A story in today’s Wall Street Journal caught my attention. After reading in the past that individuals in the EU and other countries are not the only ones heavily invested in stocks in THIS country, but Europe’s insurers
are investing in ways not typical for their industry.

What paid the bills in the past for the likes of Allianz SE were low risk bonds, now some new investments they have chosen are not typical, like investing in a military garrison for the U.K.’s Parachute Regiment, a Texas wind farm and a sixteen mile sewer tunnel in London.

Negative interest rates around the globe have forced investors, insurance firms and others to look for any type of return and take uncharacteristic chances to boost the bottom line. So when does this all end? Will it end when our Fed becomes the leader in the world and raises rates. What happens when corporate earnings fizzle out, which might be just around the corner.

In the event the Fed is forced to go the other way, I can’t even think what would happen if negative interest rates hit our shores. CDs, remember those investments? Senior citizens relied on those investments to give them some sort of return to subsidize their Social Security payments. Now they are forced into the stock market adding to that bubble and they too are making some uncharacteristic choices just to survive.

When this equity bubble bursts, will gold get a boost or will the price of gold suffer the same fate as equities as higher interest rates boost the dollar and crush the price of gold. Or will gold be the only safe haven investment?

With the election right around the corner, let’s not forget there are 469 seats in the Congress (34 Senate seats and all 435 House seats) that are up for election November 8th and they might be even more important than who winds up in the White House. It seems that because the two presidential candidates as so very entertaining, these down ballot races have little or no coverage. So believe it or not, the real big story will be whether or not the Democratic party will be able to regain control of the Senate. In order to achieve that, they will have to gain 5 seats. And let’s not forget the Supreme Court. The sudden death of Justice Antonin Scalia in February this year has made the outcome of the 2016 senate election even more important. A 60-vote confirmation is required in the Senate to confirm the next Justice. As we see what’s at stake at this year’s election, it has NEVER been more important to get up and cast your vote in the most important election this country have ever experienced.

Don’t miss your chance. Our county depends on YOU!

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About The Author

Walter Pehowich Author Name: Walter Pehowich
This editorial has been prepared by Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.

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